A financial product (derivative) that tracks the performance of an underlying asset on a one-to-one basis. In other words, if the underlying asset price increases by 1%, the product will also have a 1% increase in its price/value. The product’s delta, i.e., sensitivity to the price of the underlying product is one “1” or very close to one. This type of perfect correlation can be found in products such as swaps, futures, and vanilla exchange-traded funds (ETFs) that track a market index.
Finance
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